Enhanced Maternity Pay: An Employers Guide

17 January 2024 | Blog

In recent years, there has been a noticeable shift in the way businesses in the UK approach employee benefits. This is particularly when it comes to maternity, paternity, adoption or shared parental pay. With the rising importance of work-life balance, diversity, and inclusion, many companies that were not previously offering enhanced maternity pay are now seriously considering it.

One notable example that has stirred attention is the recent announcement by Lidl, regarding improvements in their enhanced maternity pay. Lidl will now be the first UK supermarket to double the amount of paid adoption and maternity leave they provide their staff. Eligible employees at Lidl will now receive six months on full pay. This is an improvement from their previous offering of 14 weeks.

This announcement underscores the growing importance of supporting working parents. It also demonstrates the evolving landscape of employee benefits in the UK.

What is enhanced maternity pay

Enhanced maternity pay is a policy offered by some employers to provide additional financial support. It is designed to go beyond the statutory minimum maternity leave entitlements mandated by the Government.

Enhanced maternity pay can take various forms. One common approach is to offer a higher percentage of an employee’s regular salary during their maternity leave period. For example, instead of receiving just the statutory minimum, an employee might receive full or close to full pay. This ensures that they can maintain their financial stability while taking time off to care for their newborn and recover from childbirth. The added financial security can also significantly reduce the stress and anxiety associated with maternity leave.

According to a report by YouGov, 33% of businesses only offered their employees the statutory minimum requirement while 18% have decided to provide their staff between 4 and 13 weeks enhanced pay. The report also showed that around 21% of businesses offer 26 weeks of enhanced maternity pay at or close to full pay. This was then followed by 13 weeks of statutory maternity pay.

The YouGov report also shared data on paternity pay and the results were interesting. 49% of businesses only offered the statutory minimum of two weeks, 3% offered 3 weeks, and 9% offered 4 weeks. A further 13% of businesses offered between 5 and 23 weeks’ paid paternity leave.

Should Enhanced Pay Apply to all Family-Friendly Policies?

Offering enhanced maternity pay is not a legal requirement, it’s completely down to your discretion. However, if you decide you are able to offer your staff this extra support, we encourage you to apply it to your other family-friendly policies including adoption leave and shared parental leave. This will help you to avoid a potential discrimination claim.

Furthermore, if you are offering increased pay for maternity, you should also look at an enhanced paternity pay policy.

What’s the difference between enhanced maternity pay and statutory maternity pay?

Statutory Maternity Pay (SMP) and Enhanced Maternity Pay are two distinct types of maternity pay that employers can offer to their employees. However, each have its own characteristics and purposes.

SMP is a legal requirement mandated by the government. The current statutory maternity pay in the UK provides eligible employees with 90% of their average weekly earnings for the first six weeks. This is followed by £172.48 or 90% of their average weekly earnings (whichever is lower) for the remaining 33 weeks. This will go up to £184.03 per week from April 2024.

On the other hand, Enhanced Maternity Pay is entirely voluntary and discretionary on the part of employers. Companies offering enhanced maternity pay go beyond legal requirements to provide more generous financial support to employees during their maternity leave. The eligibility criteria, the amount of pay, and the source of payment vary widely from one employer to another.

The Main Benefits of Enhanced Maternity Pay

Attracting and Retaining Top Talent

One of the main advantages of offering enhanced maternity pay is the ability to attract and retain skilled and motivated employees. Talented professionals often seek employers that offer comprehensive benefits packages, and generous maternity pay is a highly attractive feature. When potential employees know that they can enjoy financial stability, they are more likely to choose your company over others.

Moreover, once you have talented individuals on your team, providing enhanced maternity pay can be a powerful tool to retain them. Employees who feel supported during their maternity leave are more likely to return to work and remain committed to your organisation in the long run, reducing turnover rates and the costs associated with hiring and training new staff.

Enhancing Your Company’s Reputation

Offering enhanced maternity pay is a public demonstration of your company’s commitment to gender equality, diversity, and family-friendly policies. Such initiatives can help build a positive reputation for your business, both internally and externally. Employees are more likely to view your organisation as a progressive and caring employer. This can contribute to a stronger corporate culture and better relationships between management and staff.

Externally, customers and business partners may also view your company more favorably, which can lead to increased brand loyalty and collaboration opportunities. In today’s socially conscious world, being seen as a responsible and compassionate employer can give your company a competitive edge.

Cost Savings in the Long Run

While offering enhanced maternity pay may seem like an added expense in the short term, it can actually lead to cost savings in the long run. High employee turnover, absenteeism, and recruitment costs can significantly impact your company’s finances. When employees feel valued and supported during their maternity leave, they are more likely to return to work and remain committed to their roles, reducing the need for constant hiring and training.

Will employees have to pay enhanced pay back if they resign before returning to work?

If your employee resigns before returning to work after maternity leave, they will not need to pay back any statutory maternity pay they’ve received.

However, they may be expected to pay back some or all of their enhanced maternity pay if this is stated in their contract.

In Conclusion

Incorporating enhanced maternity pay into your business’s benefits package can yield numerous advantages. It not only attracts and retains top talent but also enhances employee morale and productivity, builds a positive reputation, ensures legal compliance, and leads to cost savings over time. However, it’s important to ensure your family-friendly policies are consistent and fair to avoid possible discrimination claims. By supporting working parents during a crucial life stage, your company can foster a more inclusive and productive work environment while reaping the long-term benefits of a loyal and motivated workforce.

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